Firms advised to fix compensation scheme

By Kim Yoo-chul

Korean companies should overhaul their compensation scheme and improve their ability to adapt to changes in order to speed up their globalization, according to an international consultancy.

In an interview with The Korea Times, Paul O'Malley, partner at Mercer's Information Product Solutions (IPS) division, stressed that Korean firms need to be aware of risk factors that can be triggered by a change in management systems and compensation scheme in a bid to maintain policy consistency and retain talent.

``If you want to implement changes in a controlled way, the following step is a must ― highlight internal problems, map out an organized reform plan, create long-term vision and CEO leadership,’’ said O’Malley, said.

The executive stressed the importance of communication in the change to minimize conflicts.

``Communication is certainly critical for changes,’’ according to the executive.

The partner said hiring western managers with an aim to set up global standards in management is ``not everything,’’ urging Korean firms to recruit workforces who have global mindsets to directly face off any market situation.

With more Korean firms pursuing systematic benefit systems to encourage employees to yield ``satisfactory’’ outcomes, offering initiatives is emerging as one of the top issues.

Just a few Korean industrial gizmos are applying detailed and persuasive incentive systems. Mercer claimed culture doesn’t really matter in reforming compensation schemes, calling for immediate action.

``What has to drive anything is business outcome. Companies need to have the whole series of success measures which they are aiming for,’’ said the executive by adding culture is an easy excuse to hamper an early and effective implementation of advanced systems.

``A lot of people talk about culture. Culture in Korea is not that different to other places. People don’t like change. We are creatures of habit. Therefore, it is needed to convince people to give sufficient reason to change,’’ he said.

Mercer has been in talks with several ``leading Korean exporters’’ to help them get enhanced benefits and initiative systems, though the executive declined to name names, citing the sensitivity of the issue.

The consultancy has been receiving more calls for such help in Korea.

``Companies need to think much more about what they need to do in retaining colleagues. For Korean companies, it’s the same issue in terms of employee turnover when people choose,’’ said the executive, stressing the needs to allocate more resources towards that part of the business.